Office Market Survey Mobile CBD & West Mobile, AL

Prepared by: Jill Meeks Senior Sales and Leasing Executive Jack Conger Sales and Leasing Executive Stirling Properties, LLC 1 St. Louis Street, Suite 4100 Year End 2018 Mobile, AL 36602 Office: 251-342-7229/ Fax: 251-344-0547

stirlingproperties.com Table of Contents

Mobile Office Section I Market Assessment

West Mobile Market Section II

Mobile CBD Market Section III

Stirling Properties Overview Section IV

The foregoing is solely for information purposes and is subject to change without notice. Stirling Properties makes no representations or warranties regarding the properties or information herein including but not limited to any and all images pertaining to these properties. It is the obligation of each purchaser/lessee to investigate the condition and attributes of the properties and to verify the accuracy of the foregoing information to the extent such purchaser/lessee deems necessary. Also subject to errors, omissions, changes in terms and conditions, prior sale, lease or withdrawal, without notice.

stirlingproperties.com SECTION I Mobile Office Market Assessment

As we wrap up the year and begin our trek into 2019, office Mobile CBD investment activity for both the Central Business District (CBD) and West Mobile are continuously attracting attention. Several West Mobile office buildings were sold this year, with one property being located in the CBD: One St. Louis Centre (sold to local investors), and three properties in West Mobile: Bel Air Park I located Market Occupancy at 501 Bel Air Blvd. (sold for $725,000 to outside investors), Mobile Office Park (sold for $4.95M to local investors), and 82 80.2% Hilton Square ($13.5M to outside investors). 80 76.8% 78 Office occupancy rates in the CBD increased 6.67% since 76 Q3’17. One significant move within the CBD was Hand Arendall Harrison Sale, LLC’s relocation from RSA Battle House Tower 74 to the Merchants Plaza Annex Building with approximately 72 27,000 SF. The Merchants Plaza Tower apartment conversion 70 project remains on-going, and when all said and done, there 68 will be 84 new one and two-bedroom apartments on Bienville 66 Square. One St. Louis Centre expanded the offices of Norton 64 Lilly International by 2,918 SF, and Malcolm Pirnie/Arcadis Inc. leased 2,267 SF. Overall, average rental rates in the CBD have increased to $17.40 PSF/annually. Avg. Market Rental $17.40 In West Mobile, the office market occupancy rates increased $17.50 slightly to 80.2% over the past year, however, average rental $17.00 rates increased from $15.07 to $15.26 PSF/annually. Alabama $16.50 Department of Human Resources (DHR) is relocating from their $16.00 45k SF footprint from 501 Bel air into Bel Air park II at 2970 $15.26 Cottage Hill Road by June of 2019. The ARIC Building at 1111 $15.50 Hillcrest Road leased 4,000 SF to certified public accountants, $15.00 Graham, Brown & Dutton, P.C. $14.50 $14.00 Other Market Announcements: $13.50 •Airbus has reached an agreement with Mobile Airport Authority on 82 acres at Brookley Aeroplex for the second Final Assembly Line of the recently announced joint venture with Bombardier C Avg. Absorption Rates Series Jetliner program. 8.0% 6.67% •Via Airlines announced their nonstop service from Mobile to 7.0% Orlando. 6.0%

•Mobile’s New I-10 Bridge – ALDOT officials project the release 5.0% of the final Request for Proposals to three competing teams 4.0% in Q2’19, with the winner to be selected in Q3’19. Plans are 3.0% to start construction in 2020, with completion of the $2 billion 2.0% 0.5% project in 2025. 1.0%

0%

stirlingproperties.com Mobile Office Market Assessment Cont.

•Continental Motors has begun construction on its new $75M manufacturing facility located at Mobile Aeroplex at Brookley. Completion of the 275,000SF “Blue Marlin Project” is anticipated by the end of 2019.

•Epic Alabama Shipyard, LLC (a Houston, TX based company) announced its purchase of BAE Systems Southeast Shipyards, Alabama. Epic provides ship repair and maintenance services to its customers for vessels from their own fleet and they will also provide service on Mobile Drydocks, which is one of the largest in the Gulf of Mexico.

•A new $58M warehouse project by Merchants Alabama and MTC Logistics has both city and county approval to receive a combined $500,000 from them in support. The temperature-controlled facility will use imported containers to export goods, and plans to bring up to 55 new jobs to our area.

We appreciate all who provided office market updates and transaction information to help pull together our 2018 Office Market Survey.

Montilmar Place, West Mobile Executive Center, West Mobile

Hilton Square, West Mobile Bel Air Tower, West Mobile

stirlingproperties.com SECTION II West Mobile Market

Total # of Buildings Total SF: Avg. Absorp.: Year Average Occupancy: 80.2% in Market: 22 1,623,345 0.05%

AVAILABLE RENTAL RATE OCCUPANCY ABSORPTION BUILDING NAME & ADDRESS BUILDING SIZE SQ. FT. (PSF) RATE RATE

65 Dauphin Medical & Financial Center $18.50- 7 7, 262 23,178.60 70% -10% 3290 Dauphin Street Full Service ARIC Building $13.00-+ 24,808 5,340 75% 12% 1111 Hillcrest Road $3NNN

BB&T Building $23.00- 75,000 7500 90% -6% 41 N. Beltline Hwy. Full Service

Bel Air Park I $15.50- 43,960 0 100% 0% 501 Bel Air Boulevard Full Service Bel Air Park II $14.00- 127,755 60,044 53% 0% 2970 Cottage Hill Road Full Service Bel Air Tower $14.00- 101,042 30,312.60 70% 9% 851 I-65 Service Rd. Full Service Dauphin 65 $16.00- 55,276 1,105 98% 0% 3280 Dauphin Street Full Service Dauphin Center $11.75- 44,606 1,338.18 97% 11% 2866 Dauphin Street Modified Gross Dauphin Square Building $17.50 - 28,000 0 100% 0% 3660-3664 Dauphin Street Modified Gross Executive Center $15.00- 95,000 22,800 76% -4% 900 Western American Circle Full Service Gateway Center West $14.50- 42,695 13,662.40 68% -10% 1201 Montlimar Dr. Modified Gross Hillcrest Square $10-11.00- 29,070 9,302 68% 0% 1000 Hillcrest Road Full Service Hilton Square $14.50- 117,78 4 12,956 89% -5% 3103 Airport Blvd. Full Service Mobile Office Park $13-$15.00- 106,750 44,835 58% 0% 3929 Airport Blvd. Full Service Montlimar Place $16.50- 173,101 31,158 82% -3% 1110 Montlimar Dr. Full Service Office Mall $14.00- 127,170 48,324 62% 3% 3100 Cottage Hill Rd. Full Service Paramount Office Center $16.00- 42,000 4,200 90% -5% 1141 Montlimar Drive Full Service University Place $12.50- 55,367 14,395 74% 12% 820 S.University Blvd. Modified Gross USA Tech & Research Park: Bldg 1 $19.00- 72,983 1,100-12,000 100% 0% 739 N. University Blvd. Full Service USA Tech & Research Park: Bldg 2 $18.00- 32,549 30,809 66% 0% 775 N. University Blvd. Full Service USA Tech & Research Park: Bldg 3 $16.00- 115,167 27,6 83 96% 0% 650 Clinic Blvd. Full Service Skyland Office Park $12.00- 36,000 6,480 82% -3% 3737 Government Blvd. Full Service

stirlingproperties.com SECTION III Mobile CBD Market

Total # of Buildings Total SF: Avg. Absorp.: Year-End 2018 Average Occupancy: 76.8% in Market: 11 1,463,996 SF 6.67%

AVAILABLE RENTAL RATE OCCUPANCY ABSORPTION BUILDING NAME & ADDRESS BUILDING SIZE SQ. FT. (PSF) RATE RATE

Buick Building 30,952 7, 391 +/- $16.85- NNN 100% 24% 455 St. Louis St. Commerce Building $12.75- 94,500 16,065 80% 0% 118 N. Royal St. Full Service

$15-$17.50- GM&O Building 63,628 18,749 Full Service 70% 0% 110 Beauregard St. +$3.50 cam

Landmark Square $16.50- 23,500 4,230 82% -11% 169 Dauphin St. Full Service $16.50- Meaher Building 35,000 35,000 Full Service/ 0% 0% 100 St. Joseph St. For Sale One St. Louis Centre $17.50+ 3% 97,732 14,244 85% 0% 1 St. Louis Street per year Regions Annex Building $20.00- 76,200 35,000 74% 53% 104 St. Francis St. Full Service Riverview Office Place $20.00- 165,000 36,300 78% -12% 63 S. Royal Street Full Service RSA Battle House Tower $20.25- 466,684 18,667 84% 0% 11 N. Royal Street Full Service RSA Trustmark Building $18.25- 284,000 28,400 84% 0% 107 St. Francis Street Full Service RSA Van Antwerp Building $18.25- 60,000 6,000 100% 0% 103 Dauphin St. Full Service Wells Fargo Building $16.00- 66,800 10,000 85% 26% 61 St. Joseph St. Full Service

stirlingproperties.com SECTION IV

FremauxOne Town St. LouisCenter, Centre, Slidell Mobile

Your Commercial Real Estate BY THE NUMBERS

Leader in the Gulf South $1.5 billion commercial volume for the last 5 years Stirling Properties is one of the most comprehensive full-service commercial real estate companies in the country. With more than four decades of experience, we specialize in Commercial Brokerage, Asset & 2,764 transactions Property Management, Development & Redevelopment, and Investment in the last 5 years Advisory Services over a wide array of property types, including retail, office, industrial, and multi-family sectors. 21.3 million SF Whether a tenant, investor, property owner or occupier, Stirling developed from the ground up Properties can help you find a solution for any real estate goals.

$272 million / 1.11 million SF properties under development

3.69 million SF properties acquired

$1.5 billion financing in the last 10 years

20.3 million SF properties managed

1 St. Louis Street, Suite 4100, Mobile, AL 36602 • (251) 342-7229 • [email protected]